IMPROVED partner relationships
How is it measured?
Though it is a little more difficult to measure, there are a few metrics aiming at assessing direct tangible benefits period over period:
Cost of procurement (net of negotiated discounts) over total purchases,
or cost of channel management over the indirect channels' total sales,
or the net profit share of a joint venture.
Intangible benefits also reflect improved partner relations and can sometimes be assessed in terms of savings, opportunity or replacement cost:
Joint channels, joint development, learning and knowledge transference.
Partnerships are increasingly more important in terms of strategic objectives as they prove to revitalize a firm's new business development ability and promotes innovations.
How is the result improved upon?
Cost reduction of maintaining supplier and channel relationships.
Reduction in procurement costs, or increase in negotiated discounts.
Relative increase in purchases while maintaining procurement costs low.
Increase throughput to lower the relative price.
Reduce channel and channel support costs, or reduce discounting rates.
Finding cheaper supply or distribution alternatives.
In-sourcing or vertically integrating the supply or channel function.
(Though the last two options may be costly to implement.)
How does VCM influence the result?
Some examples are:
v Integrated and collaborative supply and capacity management for greater efficiency.
v Alignment of the value chain with focus on the customer segments allows for more effective, productive and efficient processes.
v Diligent selection process of supply and channel partners.
v Shifting functions along the value chain where greater efficiency is achieved.
v Alignment of business objectives and strategies.
v Sharing of customer-centric mindset.
v Joint investment in strategy.
v Developing synergy and economies of scale with partner.
v Equitable management and sharing of results.
v Process for developing and managing relationship.
v Win-win in sharing of assets, joint development of services.
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